Tax shield at 60% of income: first refunds in 2007

Article 74 of the 2006 Finance Act creates the 'tax shield' (Articles 1 and 1649-0 A of the General Tax Code): direct taxes paid by a taxpayer (income tax, wealth tax, property taxes and housing tax on the main residence) may not exceed 60% of their income for the previous year. The excess gives a right to a refund, acquired on 1 January following the year of payment. The scheme applies to taxes paid from 1 January 2006, so the first refunds were claimed in 2007. Refunds were to be shared between the State and local authorities in proportion to their taxes; the TEPA Act (Article 11, III) placed them entirely on the State, retroactively for taxes paid from 1 January 2006. The TEPA Act of 21 August 2007 lowered the threshold to 50% and included social levies for later years; the shield was abolished by the Amending Finance Act of 29 July 2011.